Our Development Process
The process by which we develop and optimize our trading algorithms is long, intense and highly tedious. On average, over 20,000 tests are performed (per strategy) during the development period, measuring every possible combination of numeric value for each individual criterion that make up the selection process. Even the smallest change in the value of a single criterion can completely change short and long-term performance as well as drawdown and volatility metrics. A massive amount of patience and determination is needed to successfully develop a winning strategy. While technology certainly helps, it all comes down to the extraordinary expertise of our development team.
Everything begins with a base concept of what a strategy should achieve. For example, if we are looking to create a great Value strategy, we will begin with many of the most commonly respected means by which to measure a company’s current and estimated value. This may include common metric ratios such as P/E (Price/Earnings), Price/Sales or PEG (Price/Earnings Growth). Once this basis is established, we will then blend in additional metrics that will compliment it best. These may include any of a plethora of choices including earnings and earnings acceleration metrics, broker ratings and/or historical price behaviors over various market conditions.
Once a set of criterion is chosen, we begin the optimization process to determine the optimal values assigned to each parameter. While there are common ranges that are widely accepted as most attractive for many ratios and metrics, there remains plenty of exceptions to such when they are properly blended with other criterion. Rigorous testing is then performed to determine the optimal values for each criterion that best collaborate with the values of the other criterion in the algorithm to reach optimal performance. While doing this, a great deal of emphasis is placed upon reducing drawdown and volatility. Finally, we take into account current market conditions, a vast macro and micro market analysis, volatility measurements and extensive technical analysis indicators to help us achieve a winning model that can produce winners for you on a consistent and reliable basis. Of course, not all selections will be winners, but our performance statistics are truly second to none in the industry.
Take advantage of our efforts today and become a Member.
Please give us a call at 212-655-9831 or 800-655-0361 or email us at [email protected] so we can schedule a call to discuss our strategies.
We look forward to working with you.
Yours in Success,
Clayton E. Anderson